| Metric | Current Period | Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥34.03B | ¥27.94B | +21.7% |
| Operating Income | - | - | - |
| Ordinary Income | ¥6.54B | ¥5.64B | +15.9% |
| Net Income | ¥4.85B | ¥3.77B | +28.7% |
| ROE | 1.6% | 1.3% | - |
The quarter began with higher revenue and profits, driven by growth in interest income and improved cost efficiency. Revenue (ordinary income) was ¥34.03B (¥27.94B in the previous year, YoY +21.7%), ordinary income was ¥6.54B (¥5.64B, YoY +15.9%), and net income was ¥4.85B (¥3.77B, YoY +28.7%), with all three exceeding the previous year. The main drivers were increased interest income accompanying growth in loans and securities balances in the core banking business, as well as an improvement in the cost-to-income ratio (CIR). Net income grew more than ordinary income due to a lower tax burden ratio.
【Revenue】Ordinary revenue (revenue) was ¥34.03B, up +21.7% year on year. The banking business led overall performance with ¥30.19B (+26.4%, composition ratio 88.8%), supported by increases in interest on loans (+21.9%) and interest and dividend income on securities (+30.1%). Meanwhile, the leasing business recorded ¥2.98B (-6.8%), representing a decline in revenue, while other businesses were nearly flat at ¥0.84B (+1.8%).
【Profit and Loss】Ordinary income increased by +15.9% to ¥6.54B. Net interest income expanded to ¥18.29B (¥14.92B in the previous year), but other operating expenses increased to ¥4.29B (¥1.94B), partially offsetting gross profit growth. The cost-to-income ratio (CIR) improved to 67.7% from 69.5% in the previous year, indicating progress in cost efficiency. Net income increased by +28.7% to ¥4.85B, with the decline in the effective tax rate to 25.4% (33.6% in the previous year) resulting in a higher rate of profit growth than ordinary income. Extraordinary items were minor, comprising extraordinary income of ¥0.01B and extraordinary losses of ¥0.04B, and the impact of one-time factors was limited. Revenue and profits both increased.
The segments comprise the banking business, leasing business, and other businesses. The banking business recorded revenue of ¥30.19B (+26.4%) and segment profit of ¥6.48B (¥5.77B in the previous year, +12.3%), achieving higher revenue and profit and accounting for the core of the Group in both areas. The leasing business recorded lower revenue of ¥2.98B (-6.8%), but segment profit increased modestly to ¥0.08B (¥0.06B in the previous year, +26.6%). Other businesses, including credit guarantees, real estate leasing and management, and credit cards, performed steadily, with revenue of ¥0.84B (+1.8%) and segment profit of ¥0.77B (¥0.61B in the previous year, +27.3%). Revenue composition was 88.8% for banking, 8.8% for leasing, and 2.5% for other businesses, indicating a high concentration in the banking business.
【Profitability】The ordinary income margin (ordinary income/ordinary revenue) was 19.2%, down approximately 1.0pt from 20.2% in the previous year, while the net profit margin improved by approximately 0.8pt to 14.3% from 13.5%. The cost-to-income ratio (CIR) improved to 67.7% (69.5% in the previous year). 【Cash Flow Quality】Comprehensive income was ¥9.46B, exceeding net income of ¥4.85B by ¥4.61B, primarily due to an increase of +¥4.05B in valuation difference on securities. 【Investment Efficiency】ROE was 1.6% on a quarterly basis, at the same level as the previous year. Although the total asset turnover ratio remained low at 0.005x, financial leverage (total assets/net assets) remained high at 22.7x, a level characteristic of the banking industry. 【Financial Soundness】The equity ratio (equity/total assets) was 4.4%, unchanged from the previous year. The loan-to-deposit ratio (LDR) was 76.5% (loans of ¥464.49B/deposits of ¥607.52B), with loans increasing +1.0% year on year and deposits increasing +2.8%.
As cash flow statement data has not been disclosed, funding trends are assessed based on changes in the balance sheet. Deposits increased by +2.8% to ¥607.52B as a stable source of funding, which supported an increase in loans to ¥464.49B (+1.0%) and securities to ¥149.44B (+8.9%). Meanwhile, call loans were substantially reduced to ¥0.32B (¥110.00B in the previous year), suggesting a reallocation of funds from short-term investments to securities and loans. Cash and due from banks increased to ¥62.31B (¥43.55B in the previous year, +43.1%), apparently reflecting a strengthening of the liquidity buffer. Overall, the balance sheet expanded around growth in deposits, with funds allocated to both earning assets (loans and securities) and liquid assets.
Ordinary income of ¥6.54B was primarily composed of highly recurring income, including net interest income of ¥18.29B and net fee income of ¥2.96B, indicating a relatively stable earnings base. On the other hand, other operating expenses expanded to ¥4.29B (¥1.94B in the previous year), and volatility that appears to reflect the impact of valuation and trading gains and losses related to bonds may have been reflected in quarterly profit. Extraordinary items were limited, comprising extraordinary income of ¥0.01B and extraordinary losses of ¥0.04B, for a net amount of -¥0.03B, and current-period profit was primarily composed of recurring income. The difference between ordinary income and net income was mainly attributable to the tax burden (income taxes of ¥1.65B and an effective tax rate of 25.4%), and the divergence remained within a reasonable range. Comprehensive income of ¥9.46B exceeded net income of ¥4.85B, with the ¥4.61B difference primarily attributable to an increase in unrealized gains on other securities, including a +¥4.05B increase in valuation difference on securities. However, comprehensive income declined -36.2% from ¥14.84B in the same period of the previous year, and the slowdown in growth of unrealized gains on securities is a point to note when assessing earnings quality.
Progress against the full-year plan was 20.1% for ordinary income, at ¥6.54B/¥32.50B, and 22.0% for net income, at ¥4.85B/¥22.00B. Although these figures are slightly below the 25% benchmark for quarterly progress, no revisions to the earnings forecasts had been made as of the current quarter. Actual EPS of ¥30.88 represented progress of 22.0% against the full-year forecast of ¥140.07, consistent with the progress rate for net income.
The full-year dividend forecast is ¥28 per share, implying a payout ratio of approximately 20.0% based on the full-year EPS forecast of ¥140.07. No revisions to the dividend forecast had been made as of the current quarter. As a stock split at a ratio of 5 shares for each share was implemented with an effective date of April 1, 2026, it should be noted that the previous-year dividend of ¥95 (on a pre-split basis) and the current-year forecast of ¥28 (on a post-split basis) cannot be directly compared.
Capital Level: The equity ratio (equity/total assets) was 4.4%, unchanged from the previous year. Against total assets of ¥693.09B, net assets remained at ¥305.76B, and financial leverage remained high at 22.7x. The trend in capital adequacy requires continued monitoring.
Volatility of Market-Related Earnings: Other operating expenses increased to ¥4.29B from ¥1.94B in the previous year. Securities increased to ¥149.44B (+8.9%), creating a structure in which fluctuations in valuation gains and losses during periods of interest-rate movements can readily affect quarterly profit.
Balance Between Funding and Investment Costs: Interest on deposits increased to ¥0.43B (¥0.25B in the previous year, +71.8%), exceeding the +21.9% growth in interest on loans. If funding costs continue to rise faster than investment yields, this could lead to stagnation in net interest margin growth.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 14.3% | – | – |
The Company’s net profit margin of 14.3% improved from 13.5% in the previous year. Additional data will be needed to assess its relative position within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 21.7% | – | – |
The revenue growth rate of 21.7% represents strong growth reflecting the expansion of interest income. The Company’s industry positioning is expected to be assessed more precisely as median data is expanded.
※Source: Compiled by the Company
In addition to higher revenue and profits, the cost-to-income ratio (CIR) improved to 67.7% (69.5% in the previous year), while the net profit margin also increased to 14.3% (13.5% in the previous year), highlighting simultaneous progress in cost efficiency and profitability.
Progress rates for both ordinary income and net income against the full-year plan remained in the low 20% range, slightly below the benchmark for evenly distributed quarterly progress. The pace of progress toward the second half of the fiscal year will be a key point to monitor.
Comprehensive income (¥9.46B) exceeded net income (¥4.85B), but the majority of the difference was attributable to the increase in valuation difference on securities. Comprehensive income itself declined -36.2% year on year. The degree of reliance on unrealized gains on securities remains a key point to monitor when assessing earnings quality.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.
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